Rivals seek Team NZ Cup money

A mystery rival is asking officials in the United States to investigate Team New Zealand's use of money earned from trademark rights for the America's Cup.

Team NZ use the money to pay for hosting the event, with any surplus spent on financing the sailing team who will defend the trophy next year.

But at least one challenger, Alinghi of Switzerland, are suggesting that a surplus should be distributed among all the teams.

Two former high-profile Team NZ members, Russell Coutts and Brad Butterworth, are key members of the Alinghi challenge.

Alinghi have not laid any complaint with the New York State Attorney-General, but someone has asked questions about what trademark income can properly be spent on.

The amount earned from trademark rights is not known, but it is increasing as the cup becomes more commercial.

For Team NZ, operating in a small economy with limited sponsorship opportunities, money from America's Cup trademarks is a vital part of their defence budget.

The Attorney-General's office would not say who laid the complaint, or exactly what it was about. A spokesman did confirm that an inquiry was under way.

A discussion paper written by Alinghi rules adviser Hamish Ross is central to the dispute, and it is understood to propose changes to the cup management while questioning if the event should have been registered as a charitable trust.

Mr Ross said yesterday that no one from Alinghi had laid a complaint with the Attorney-General's office, which oversees trusts in New York state. He declined to comment further. However, Alinghi media spokesman Bernard Schopfer said the Swiss wanted to "get around the table" with Team New Zealand, Oracle BMW Racing and Prada to talk about proposals.

Mr Schopfer said the issue was the commercial future of the event, and a view held by some that the America's Cup had a value which should be managed for all teams.

Exactly why Alinghi are pushing for a change is not clear, but there has been talk about limiting the influence the America's Cup defenders have over the regatta.

Pharmaceutical billionaire Ernesto Bertarelli set up Alinghi after the last cup, hiring Coutts and Butterworth, who were disenchanted with the financial management of Team NZ.

Team NZ chief executive Ross Blackman said the New Zealanders had applied to the Attorney-General's office to find out who laid the complaint.

He said it could take several months to receive an answer.

In the meantime, Team New Zealand were preparing answers to questions put to it by the Attorney-General's office.

The office is involved because one of the founding documents of the America's Cup, known as the Deed of Gift, is registered in New York and makes reference to the trophy being held in "trust".

However, the increased money-making potential of the cup, particularly in the past 20 years, has led to pressure for changes in the way the regatta is administered.

Initially, the New York Yacht Club, which held the cup for 132 years, formed a company called America's Cup Properties to patent and register the trademarks of the event.

Since the club lost the cup in 1983, the company's shares have been transferred to the various new cup holders in Australia, San Diego and now Team NZ.

While the defender and all challengers are licensed to use the America's Cup symbol, only the cupholder can raise funds through use of the trademarks.

Those funds have been used to pay for running the event, along with income from broadcasting rights, with any surplus used by Team New Zealand as part of their fundraising for the team's sailing budget.

It is understood that the query to the Attorney-General's office has asked whether that is a proper use of America's Cup Properties' funds, or whether the event should instead be registered as a charitable trust with any surplus split between all the syndicates.

But even that would be difficult to achieve, with sport not recognised as a beneficiary of charitable trusts in New York state.